BIMB ends negotiations on Syarikat Takaful stake sale

By Lee Cherng Wee
BIMB Holdings Bhd has ended talks to sell a strategic stake in Syarikat Takaful Malaysia Bhd to Abu Dhabi-Kuwait-Malaysia Strategic Investment Corporation (ADKM Investment).
In an announcement on Nov 16, BIMB said it received a letter from the corporation stating that due to the changes in the current economic conditions, circumstances are no longer conducive for it to continue to pursue the proposal.
The exit of ADKM Investment from the deal is the second time that BIMB has been rejected by a Middle East institution. Early last month, Dubai Financial Group LLC snubbed Bank Islam Malaysia Bhd's issue of Islamic convertible redeemable non-cumulative preference shares (Islamic CRNCPS) aimed at raising RM540 million.

According to Syarikat Takaful's annual report dated June 30, BIMB is the biggest shareholder with a 65.22% stake, followed by Islamic Development Bank with 4.3% and Employee Provident Funds with 3.83%.
On June 19, 2008, BIMB announced that it received approval from Bank Negara Malaysia to commence negotiations with ADKM Investment for the sale of a stake not exceeding 49% in Syarikat Takaful.
It was the second suitor for Syarikat Takaful as BIMB had earlier called off talks with Dubai-based Islamic Arab Insurance Co PJSC (Salama) in December 2008 because it viewed ADKM Investment as a better fit.
At the Bank Islam end, BIMB holds a 51% majority stake in the nation's first Islamic bank followed by Dubai Financial with 40% and Lembaga Tabung Haji with the remaining 9%.
Both BIMB and Tabung Haji have accepted the offer for thei r ent it lement s amounting to RM275.4 million and RM48.6 milllion respectively, raising the country's oldest Islamic bank total's tier-1 capital by an additional RM324 million.
Dubai Financial's portion of RM216 million was then taken up by BIMB and Tabung Haji on a pro-rated basis.

(This story appeared in The Malaysian Reserve on Nov 17, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)